Negative Stockholders' EquityNegative shareholders' equity signals accumulated deficits and financial distress, limiting the firm’s ability to absorb shocks or raise non-dilutive capital. Over months this increases insolvency and covenant risk, constraining investment, supplier terms, and strategic flexibility unless equity is restored.
Weak Cash Flow GenerationPersistent negative operating and free cash flow undermines internal funding for working capital, capex and debt service. This structural liquidity weakness raises refinancing and solvency risks, forcing reliance on external financing or asset sales and limiting ability to fund growth or margin-improvement initiatives.
Ongoing Losses And Negative MarginsContinued operating losses and negative margins indicate structural profitability issues and operational inefficiencies. Over the medium term this prevents retention of earnings to rebuild equity, necessitates external capital, and makes sustainable competitiveness difficult without clear margin remediation or business-model changes.